Jul172006

SD-366Energy Committee Hearing Room02:30 PM

J. Byron McCormick

Dr.

Testimony before the U.S. Senate Committee on Energy and Natural Resources

Full Committee Hearing on Hydrogen

Dirksen Senate Office Building, Washington, D.C.

July 17, 2006

Mr. Chairman and Committee Members, thank you for the opportunity to testify today on behalf of General Motors. I am Byron McCormick, Executive Director of GM’s Fuel Cell Activities. I lead GM’s global effort to develop hydrogen-powered fuel cell vehicles.

This is an important time in the history of the automotive industry and of General Motors. The world we live and do business in is changing. Automotive technology is clearly changing. Technologies like our new 6-speed transmissions, variable valve timing, and cylinder de-activation – what we call active fuel management – continue to incrementally increase the fuel efficiency of the internal combustion engine. Hybrid technologies – such as our transit bus hybrid system, our hybrid pickup truck, and our new Saturn VUE Green Line hybrid – are saving energy by shutting off the engine while the vehicle is stopped and capturing energy previously wasted during braking. Our two million already fielded FlexFuel vehicles capable of burning E85 ethanol, and diesels running on biodiesel, provide an immediate opportunity to replace petroleum with renewable fuels. And we continue to track new developments in battery technology and believe these could be relevant in a variety of applications.

Taken together, these technologies will have a definite impact on our consumption of petroleum. But, we believe it is hydrogen fuel cell technology that can make the greatest progress.

At General Motors, we believe this technology will simultaneously increase energy independence and security, remove the automobile as a source of emissions, and allow automakers to create better vehicles that customers will want to buy in high volumes.

• Collaborating with energy companies and governments to ensure that safe, convenient, and affordable hydrogen will be available to our customers in a timely fashion.

• Working with governments worldwide to ensure that appropriate market conditions and incentives are in place to enable a successful market introduction and subsequent sustainable market expansion.

At General Motors, we are targeting to design and validate an automotive fuel cell system that has the performance, durability, and cost, assuming scale volumes, to compete effectively with internal combustion engine-based systems. We are making great progress in developing the necessary technologies, and are increasingly confident that we will reach our goal by 2010. Achieving marketplace volume, however, will depend on a number of factors beyond GM’s or any vehicle manufacturer’s control, as I will discuss later.

Technically, we have made significant progress:

• In the last seven years, we have improved the power density of our fuel cell stack by a factor of fourteen. This means that for the same amount of power, our fuel cell is 1/14th as large today as it was seven years ago. This allows it to fit nicely within our vehicles while providing excellent driving performance.

• We have significantly improved, and will continue to improve, fuel cell durability, reliability, and cold start capability – all keys to meeting our customers’ expectations.

• We are developing safe hydrogen storage systems that approach the range levels required for customer acceptance, and are exploring very promising concepts for the next generation of storage technology.

• We are making significant progress on cost reduction through technology improvement and system simplification.

Today, we are demonstrating our vehicles around the world:

• Here in Washington, D.C., over 4,300 people have participated in a ride or drive over the past four years. And the U.S. Postal Service has delivered over a half million pieces of mail in northern Virginia. We also have similar demonstrations under way in California, Japan, Germany, China, and Korea.

• We have collaborated with the U.S. Army in demonstrating the world’s first fuel cell-powered full-size military truck, which is being evaluated and maintained by military personnel at both Ft.Belvoir and CampPendleton.

• We will field 32 of our next-generation fuel cell vehicles as part of the Department of Energy’s Learning Demonstration.

• And we created the AUTOnomy, Hy-wire, and Sequel concepts, which show how new vehicle architectures based on fuel cells and hydrogen can reinvent the automobile. Sequel is the first fuel cell vehicle capable of driving 300 miles between fill ups. Later this year, we will be holding test drives to demonstrate the capabilities of this truly impressive vehicle.

The development of technically and commercially viable hydrogen fuel cell vehicles is a team effort, and we are working with key partners on virtually every aspect of fuel cell and infrastructure technology. In addition to the military, some major partners include Shell Hydrogen, Sandia National Lab, Dow Chemical, Hydrogenics, QUANTUM Technologies, and the Department of Energy through the FreedomCar and Fuel Partnership.

GM applauds the Department of Energy and the federal government for its hydrogen infrastructure initiatives. However, in our view, more needs to be done if we are to be ready for fuel cell introduction and the sustainable market growth that we envision over the coming decades.

Four specific areas for U.S. policy development should be considered:

First: While we have made dramatic progress toward a first-generation automotive-competitive system, as with any new technology, the real volume and benefits will be realized in second-generation designs and beyond. As such, we would like to see an expanded national R&D initiative on breakthrough fuel cell materials, hydrogen storage, and hydrogen generation – leveraging the creative capabilities of our government labs, universities, and industrial research facilities – to help us move quickly to later-generation technologies and designs.

Second: We would also like to see the federal government articulate a clear, concise, broadly sanctioned vision that requires agencies beyond DOE and DOD to make hydrogen and fuel cell technology development and application priority areas of engagement.

Clear, consistent, ongoing communication to the American people of this vision and the underlying rationale for hydrogen and fuels cells is also vitally important to building public acceptance of fuel cell vehicles.

Third: Even after we succeed in developing “auto-competitive” fuel cells, the transition to hydrogen will take time. It takes about 20 years to sell enough vehicles to change over the entire vehicle fleet. And, since low volume equals high cost in the automotive business, early vehicles even at moderate volumes will still be expensive, even if our technology can compete at high volume. So we face the proverbial “valley of death” for new technologies as we attempt to growth the market. This is where we see the need for creative policies, incentives, and governments as customers to support the development of the market and creation of a high-volume-capable supply base.

Fourth: Although GM is not in the energy business, as we work to commercialize fuel cell vehicles, we have a keen interest in the pathways to creating and distributing hydrogen, and the technologies and economics involved.

We think about hydrogen like we think of electricity. When we switch on a light, we are usually not thinking about how the electricity is being generated. In most cases, how that is done depends on where we are. We may be drawing on a hydroelectric plant, natural gas-fueled generating station, a nuclear or coal-fired power plant, wind turbines, or even solar cells.

Hydrogen can be made from all the same sources that can be used to generate electricity, which gives us the “power” as a society to choose how we want to produce the energy we need. Each region will evaluate the resources it has available – and, as technology progresses, the economics improve, and societal expectations for environmental and energy sustainability heighten, different options will become preferable in different locations. We do not see an ultimate barrier to making clean hydrogen at prices that can compete with today’s price of gasoline. But, coordinating a successful, sustained market transition will require proper government policies.

So, what is the best way to proceed? To date, this has been primarily an industry initiative, but we’re facing a larger challenge than technology development, larger than something a single automotive company or industry can accomplish – the federal government has an important role to play in helping to incentivize and reduce investment risk and achieve a sustainable transition.

The federal government has historically played this role in transportation initiatives that have addressed larger societal needs – for example, in the creation of the transcontinental railroad and the federal interstate highway system. Low-interest financing; appropriate vehicle purchase incentives; tax credits for investment in a jobs-producing U.S.-based automotive supply base, hydrogen-generation industry, and hydrogen refueling infrastructure, timed and regionally focused to match the rollout of fuel cell vehicles; or other meaningful policies are necessary to support industry’s massive investments in the fundamental underpinnings of our automotive transportation systems, supply base, and fuel infrastructure.

At GM, we are making a very large commitment in dollars and manpower to create a market-ready fuel cell vehicle as soon as possible. Our fuel cell program expects to develop clean, affordable, full-performance fuel cell vehicles that will excite and delight our customers. We believe that with the support of a well-conceived set of policies to incentivize and sustain market and industry development, our customers will buy these vehicles in large numbers and that society will reap the economic, energy, and environmental benefits.

Similarly, we believe that building clean, renewable energy pathways will enable America to reduce its dependence on imported oil, increase our energy security, promote the creation of new industries, stimulate jobs creation and sustainable economic growth, and ensure our country’s ability to compete on a global basis.

General Motors is ready and eager to work collaboratively with government, energy companies, and suppliers to help drive the Hydrogen Economy to reality.